The ongoing crisis in West Asia underscores a reality for India – the Strait of Hormuz is not merely a geographic chokepoint; it is a structural vulnerability embedded within India’s energy economy. The majority of the world's oil and major LNG flows pass through this short maritime corridor, so any disruption almost instantly results in price instability, supply bottlenecks, and policy recalibration in New Delhi. Iran’s effective blockade of the Strait amid a widening regional conflict has halted most tanker traffic, stranded vessels, and triggered one of the most severe energy supply disruptions since the 1970s globally. Oil prices have surged sharply, with alternative crude grades spiking above USD 150 per barrel, reflecting both supply shortages and logistical constraints. For India, the implications are immediate and multidimensional.
Structural dependence and exposure
India’s vulnerability stems from the structure of its import dependence. The country imports over 85 per cent of its crude oil and relies heavily on West Asia for both oil and gas. Roughly 40–50 per cent of its crude imports, over half of its LNG supplies, and nearly 90 per cent of LPG imports transit through the Strait of Hormuz. This creates a layered dependency—not only on suppliers but also on a single maritime route. The LPG dimension is particularly acute. About 60 per cent of India's LPG consumption is imported, and the country's reliance on reliable supply systems has increased due to the growth of household usage under welfare schemes. Disruptions at Hormuz, therefore, have swiftly resulted in domestic shortages and political pressure.
Energy substitution and supply diversification
India’s response has been shaped by its evolving diversification strategy. Over the past few years, New Delhi has reduced its reliance on any single geography, importing crude from nearly 40 countries and routing a significant share through alternative maritime paths. This has provided some resilience, ensuring that crude oil supplies remain relatively stable in the short term despite the crisis. The most visible adjustment has been the increased import of Russian crude. In March 2026, Indian imports from Russia surged by nearly 50 per cent, reflecting a rapid pivot toward non-Hormuz supply chains. In a similar vein, India is exploring imports from the US, West Africa, and Latin America, albeit at the expense of increased freight costs and longer transit times. Diversification has its limitations, though. Long-distance shipping raises the cost and delivery time, and different crude grades might not be entirely compatible with current refinery setups. Additionally, the markets for LNG and LPG are less flexible than those for oil, which makes short-term substitution more challenging.
Domestic policy responses and crisis management
New Delhi’s response has combined administrative control with market interventions. A 24×7 monitoring mechanism has been established to track fuel stocks and distribution, while domestic refineries have been directed to maximise output. Diverting hydrocarbon streams has increased domestic production in the LPG sector, leading to a reported 25% rise in output. Additionally, demand management has been crucial. LPG cylinder booking periods have been lengthened to minimise hoarding, while industrial gas use has been reduced to prioritise households. Given the political sensitivity of gasoline inflation, fiscal support, such as payments to oil marketing firms, has been used to stabilise retail prices.
At the diplomatic level, India has engaged Iran to secure limited transit exemptions for its vessels and is coordinating maritime safety measures to ensure the passage of critical shipments. This underscores a key feature of India’s energy strategy, employing crisis management through calibrated diplomacy rather than overt securitisation.
Broader economic and sectoral spillovers
The disruption affects the economy more broadly than just energy markets. Increased fuel prices have an impact on a variety of industries, including manufacturing and agriculture, by raising transportation and logistics costs. Export industries, such as basmati rice, are already experiencing higher freight costs and delayed shipments due to disruptions in West Asian ports and shipping routes. Inflationary pressures are also transmitted through multiple channels, including fuel, fertilisers, and electricity generation. LNG shortages, for instance, have prompted curtailments in industrial gas supply, affecting production in energy-intensive sectors such as petrochemicals and fertilisers. At the household level, the LPG crisis illustrates how external geopolitical shocks can translate into everyday economic stress—raising cooking fuel prices and forcing behavioural adjustments, including shifts to alternative energy sources.
Strengths and Strategic Lessons
The Hormuz disruption reinforces three structural lessons for India’s energy policy. First, diversification is necessary but remains insufficient. Even though India's reliance on the Strait has decreased, vital industries, like LPG and LNG, are still very vulnerable. A major concern is the lack of strategic stockpiles for these fuels. Second, supplier diversity and logistics resilience are equally crucial. In the Gulf, pipeline bypasses (like those in Saudi Arabia and the United Arab Emirates) demonstrate how infrastructure can reduce chokepoint concerns. India must instead make investments in transportation capacity, storage, and supply chain flexibility because it lacks similar external infrastructural leverage.
Third, energy security is inseparable from maritime security. The situation reignites discussions over whether India should continue to rely on diplomatic balance or take a more active naval role in securing sea channels. Even if the costs of restricted cooperation are still rising, a stance of calibrated engagement rather than overt securitisation is still more likely given India's multi-pronged partnership strategy. New Delhi has consistently relied on a mix of diplomacy, naval presence, and risk management to safeguard its interests. Finally, the crisis underscores the slow pace of energy transition. Despite policy emphasis on renewables, India’s economy remains deeply tied to fossil fuel imports. Energy security calculations will continue to be anchored by hydrocarbons in the near future, rendering chokepoints like Hormuz persistent strategic issues.
A disruption in the Strait of Hormuz is not a hypothetical stress test; it is a recurring structural risk with immediate consequences for India. The current crisis reveals both the gains from diversification and the limits of existing policy frameworks. India has managed short-term stability through a mix of supply re-routing, demand control, and diplomacy. Yet, the episode also exposes deeper vulnerabilities in LPG dependence, logistics resilience, and strategic reserves. In essence, Hormuz is less a distant geopolitical theatre and more a pressure point within India’s domestic political economy, where global conflict, market volatility, and policy constraints converge.
